Could Regulations Sweep You Out of Business?

How do you walk the tight rope between federal laws, public health and the economic impact to small business?

Balancing these things can be difficult. “While we are promoting and protecting public health, we take into account the economic impact it will have whenever we pass new regulations,” says Beth White, manager of the on-road compliance section at the California Air Resource Board. “We look at the emissions impact and try to figure out the most economically feasible path.”

According to CARB’s website, “in 1998, California identified diesel exhaust particulate matter (PM) as a toxic air contaminant based on its potential to cause cancer, premature death, and other health problems. Diesel engines also contribute to California’s fine particulate matter (PM2.5) air quality problems. Those most vulnerable are children whose lungs are still developing and the elderly who may have other serious health problems. Based on year 2006-2008 emissions in California, diesel PM contributes each year to approximately 2,000 premature deaths, with an uncertainty range of 1,500 to 2,400. In addition, diesel soot causes visibility reduction and is a potent global warmer.”

The EPA quotes numerous scientific studies linking particle pollution to increased respiratory symptoms, such as irritation of the airways, coughing, difficulty breathing, decreased lung function, aggravated asthma, development of chronic bronchitis, irregular heartbeat, nonfatal heart attacks and premature death in people with heart or lung disease.

CARB did this to meet federal attainment regulations on air quality. “We are not in attainment and haven’t been for several years,” says White. “We have used all of our extensions and now we have to meet those federal requirements or risk losing federal highway funds.”

While California has a legal obligation to meet these requirements, it’s also concerned about the health of its citizens. “Seventy percent of air quality cancer risk comes from diesel particulates,” says White. “Anyone living in California will benefit from cleaner air. Our mission is to provide a healthier living environment that we can pass to our children.”

If you don’t live in California, you may be asking yourself, “What’s this got to do with me?” According to NAPSA, several states are considering similar regulations, such as New York, New Jersey, Massachusetts, Maine, Connecticut, Rhode Island, Pennsylvania, Vermont, New Mexico, Oregon, Washington, Maryland and Florida among others.

There are complicated compliance methods that include a phased-in approach, downsizing and credits. But, basically, if your fleet is producing X amount of emissions, then your fleet will need to come into compliance to produce only Y amount of emissions.

This could mean, depending on the model year and weight of your sweeper fleet, that if you have 20 trucks, then six of them would need to be brought into compliance with the phased-in approach.

With the phased-in approach, you will need to bring a certain percentage of specifically dated engines into compliance by certain years. “For example, if 75 percent of your fleet is 1999 or older, you will want to use the phased-in approach to come into compliance,” says White. “This will enable you to retrofit 30 percent of those with a filter and give you credits.”

There are also different calculations for low-use vehicles (less than 1,000 miles per year), small fleets and certain areas of California. There are also other things that you can do. “For example, if you were to put filters on your entire fleet by 2014, then you wouldn’t have any replacement requirements until 2020.”
CARB also offers credits for installing retrofits early, downsizing your fleet, replacing older models with 2007 or newer engines and hybrids.

If you choose to retrofit your truck, then you will be installing, or paying someone else to install, a filter, which can range $13,000 to $20,000 depending on the size of your engine. Wells Sweeping began retrofitting their sweepers in response to the regulations and have branched out to provide the service for others. “I’ve seen a lot of installs and you don’t want to just throw a filter on there,” says Jay Wells, owner of Wells Sweeping. “We’ve tried and tested different filters and the ones that we install on other sweepers are the ones that we use on our trucks. We know they work.”

Wells says that installing a filter can be very tricky. “These filters are much harder to install on a sweeper than a regular truck,” says Wells. “A sweeper is a very compact piece of equipment—there are a lot of safety issues.”

CARB has a handy calculator on its site to help you figure out which trucks fall under what regulations. From their homepage, click on the big yellow tab labelled “The Truck Stop” to find all kinds of handy information about compliance and reporting. The calculator is under “Which Regs Apply to Me?”

With Wells’ fleet, he says that he has had to stop taking money from his business to be able to afford compliance. “If I didn’t have a son who wants to take over the business, I would’ve sold out,” says Wells, whose son just had a baby girl. “I want to be able to pass my family business to him so I have an incentive to see this through. But, it’s a lot for a business owner to go through.”

Wells even looked at relocating to another state. “By the time you take into account selling your house and your business property at a loss, finding new customers and buying new properties, it costs about the same as staying and complying.”

The California chapter of NAPSA came together to share their concerns with CARB and hired a CPA to perform an audit of several sweeper companies. The accountant found that all but the largest sweeper companies will be forced out of business within three years.

Penalties can be severe—up to $10,000 per day for noncompliance. “We want to work with small business owners,” says White. “Reporting is key. If you are making a good faith effort, we can work with you. Don’t not report or fail to comply because you feel that you can’t.”

CARB also offers a variety of funding to help small business owners come into compliance. There is a funding button that allows you to put in specific information about your fleet to see if you qualify for any of the grants, loans, loan guarantees, vouchers or rebates available.

“We have a variety of programs to help ease the transition,” says White. “There is the 1B money program, the Carl Moyer voucher program, A118 and a loan guarantee program. It may be awhile before someone can get approved for 1B because there are so many people already in the program. We do have a certain amount of oversubscription. But, the Carl Moyer program is great because we give the small business owner funding up to $45,000 for retrofits. You apply through your local air district. They have five days to get back to you and if you are approved, your money follows shortly thereafter.”

CARB will also serve as a loan guarantor, which means that it guarantees your loan to the bank. “This is a great option for small business owners who’s credit is just on the line, or who’s bank has told them, ‘Well, you still owe us for the sweeper’ or asks, ‘What’s a retrofit?’” says White. “This program is aimed at small businesses with 40 or fewer trucks, 100 or fewer employees and with annual revenues under $100 million.”

“If you are having trouble complying then I would suggest applying for the various funding options that are available,” says White.

“I’ve applied several times and have been turned down because there wasn’t enough money left,” says Wells. “The grants are gone. The people who knew that this was coming in 2005, got in and got it. As far as I know, there hasn’t been a single sweeper funded in the Sacramento area.”

“I foresee a lot these guys getting out of the sweeper business,” adds Wells. “I’ve heard several of them say that they are going to run their trucks until they’re out of compliance and retire. I even had a guy call me about a month ago asking if I wanted to buy his business.”

White says, “we have several opportunities in place to work with those guys who are planning on retiring. There are ways to delay compliance or relax it, especially if you are looking to retire in the next couple of years.”

CARB sounds like it wants to work with small business owners so that they don’t go out of business. White agrees that sweeping has an environmental benefit, “the less dust that we are stirring up, the better. The bulk of our legislation is particulate matter and any removal of particulate matter would be a benefit.”

In practice, at least according to Wells, it seems like there will inevitably be fewer, maybe a lot fewer, sweeping companies in California once all of the regulations are in place. Only time will tell.

Either way, by 2023, when all of the fleets will need to be in compliance, California should have more breathable air.

For more information on CARB, visit www.arb.ca.gov

For more information on EPA,
visit http://www.epa.gov/air/oaqps/greenbk/multipol.html

For more information on the NAPSA-sponsored webinar On-Road and Bus Regulations, Don’t Get Kicked to the Curb, visit www.powersweeping.org